For the years 2010 through 2014 (inclusive)Max,a surgeon,has been involved in bowling competitions.Only in 2013 and 2014 did his revenue exceed the expenses from the activity.Which statement is correct?
A)The activity is a business.The IRS cannot prove it is a hobby.
B)The activity is a hobby.Max cannot prove it is a business.
C)The activity is presumed to be a business.However,the IRS may prove it is a hobby.
D)The activity is presumed to be a hobby.However,Max may prove it is a business.

Question

Quizplus · Accepted Answer

The IRS presumes an activity is a hobby if it does not make a profit in at least 3 of the last 5 years. Max's activity only made a profit in 2013 and 2014, so it is presumed to be a hobby, but he can provide evidence to prove it is a business.

For the Years 2010 Through 2014 (Inclusive)Max,a Surgeon,has Been Involved